Everything you need to know about bond preapproval

Becoming a homeowner is a big task, and one best tackled one step at a time. The first step in the financial journey towards homeownership is getting preapproved for a home loan. Jawitz Properties unpacks the ins and outs of bond preapproval and explains exactly how this is obtained with the help of ooba - South Africa's leading experts in home loans.

First things first: what is preapproval?

Getting preapproved for a home loan involves knowing your credit score, getting a good idea of what you'll be able to afford every month as a home loan repayment and ultimately understanding how much money you are likely to be granted as a home loan. It is important to understand that being prequalified does not guarantee acceptance of a home loan application. It does, however, provide a great indication of how much the bank is likely to grant you as a home loan. This means that when you start house-hunting, you have a good idea of what your price bracket is and what you can afford.

How to get prequalified

With ooba Home Loans, there are two steps to the preapproval process. For starters, you can do a "DIY" home loan preapproval using the online bond indicator in just a few minutes. This involves keying in your income and expenses and having a quick online credit check done. Alternatively, you can enlist the help of ooba's home loan experts, which may give you a more exact idea of the amount that you are likely to be granted as a home loan. This option involves waiting for a phone call from one of ooba's experts, who will take a look at your income and expenses. You'll need to provide some documentation, such as your latest payslips and bank statements. After this is complete, you'll receive a Qualified Buyer's Certificate.

The benefits of bond preapproval for buyers

The benefits of going through the bond preapproval process can save would-be homeowners sleepless nights and disappointments in various ways:

• Since being prequalified gives you a clear idea of what you can afford, it makes it more likely that you'll get approved for the finance required once you've found the home of your dreams.
• Knowing what you are likely to be able to afford safeguards you from falling in love with a R2 500 000 house when you will only be approved for a home loan of R2 000 000.
• More than 90% of ooba's home loan applicants who have successfully prequalified ultimately get their home loan applications approved.

Why credit checks form an essential part of home loan prequalification

In order to get an accurate estimation of how much you will be granted as a home loan, it's essential to carry out a credit check. Legislation in the National Credit Act stipulates that financial service providers cannot loan consumers amounts that they will be unable to comfortably repay. Your credit history and how faithfully you have repaid past loans will also come into play here.

If you've done a credit check yourself, you'll know that a credit rating is a three-digit number. To get a home loan application approved, your credit score is likely to need to be above 600. If your current credit score is lower than that, you need to look at how you can improve it. Paying your bills on time and in full, paying off credit card debt and closing some of your accounts are all things that you can try to improve your current credit score.

Once you've got your Qualified Buyer's Certificate, it's time to start the property search in earnest. You can trust the widely experienced team from Jawitz Properties to help you find the property that's right for you in any corner of South Africa. Contact us for more information - we are more than happy to introduce you to our ooba representatives to guide you along and set you on right track to start your property journey.